Business & Marketing Tip #101

PSSST… Wanna learn the secret to how one guy created a multi-million dollar passive income and he knew almost nothing about the industry he was in?

Creative ways to increase your cash-flow. How to sub-lease real estate within your business premises.

One of the most successful real estate chains in the world is a company called "Re-Max Realty."

Re-Max Realty has a business model based on a completely different view of how a business should be run. The owner saw a massive opportunity in creating a real "win-win" situation for his employees. He realized that most people work much harder when most of their effort is rewarded directly to them. He also did not lose sight of why he is in business; simply, to make money for himself and, if possible, to empower others. This mindset and approach to business made this gentleman a millionaire many, many times over.

So how does it work and what makes Re-Max so unique?

We all know in a traditional agency, the house seller (the vendor) pays approximately 3% of the sale price to an agency for listing and selling the property. Of that 3%, the agency gets a large chuck of the commission and the agent gets the remainder.

Re-Max changed that. They said, "We want you, the agent, to keep 100% of the sales commission!" In other words, Re-Max realty receives none of the commission paid by the vendor.

"So how does Re-Max make money?" and how can their unique strategy apply to your business?

Just stop and think what impact and advantage that gives Re-Max in the market place.

Do you think they would attract interest from the best sales people in Real Estate?

Do you think their agents will work a lot harder than agents working for other firms?

Do you think their clients are going to get much better service and in turn will tell others?

These are only three of many, many advantages this kind of approach has. Let me explain where Re-Max makes it’s money and why today, the owner of that company makes several million dollars a year in personal income, through real estate sales, without having to sell a single house.

Every Re-Max real estate agent leases office space and pays a fee weekly, to build their own business under the Re-Max banner. It’s like buying a mini franchise with little or no upfront cost involved. The owner is actually selling real estate, the real estate is only about 3 square metres of floor space, but it is real estate.

Does this make sense?

You see, what is critical here is understanding that there is more than one way to achieve an outcome. I believe the Re-Max model is the way of the future. Opportunity creation is where real money is made.

In the hairdressing industry, particularly in the United States and Canada, sub-leasing chairs is to independent cutters is common-place. However, very few places have caught onto the idea as Re-Max did. They sign leases. They have a structured training system that retains the "tenant." They treat sub-leasing as a real business because that’s exactly how they make money.

Virtually every business can do this. What if you eliminated your wages bill completely and replaced it with a guaranteed income stream, secured through leases, and then sold your business to an investor or kept it as a passive cash flow?

People want opportunity.

Worth some further thought.

About the author. I’m Mark Fregnan, founder of Kinetic Media & Marketing, an Australian business that focuses entirely making our clients MORE PROFIT WITH LESS EFFORT. We understand the financial and time pressures felt by small business owners especially in the new world economy. We rely on our proven marketing and business strategies along with smart systems to produce and maintain a healthy increase in sales and profit for our business clients.